I'm David Johnston. Managing Director of the Decentralized Applications Venture Fund. Ask Me Anything.

[DJohnston]

Hi Everyone,

For those that don't know me yet, here is a quick introduction and background on myself.

I've been a technology entrepreneur most of my life having founded or joined 10 startups in the past 15 years. https://www.linkedin.com/in/davidajohnston

I've been in the Bitcoin space since 2012 when a friend introduced me to the technology.

Since then I've spoken at a lot of bitcoin conferences around the world about building startups and investing in the blockchain space: https://medium.com/@DJohnstonEC/videos- ... 3ebd6d5309

In 2013, while at the San Jose Bitcoin Conference, I co-founded the BitAngels with Michael Terpin and Sam Yilmaz, which grew into the largest bitcoin angel group actively reinvesting bitcoin back into the ecosystem. Later that year I wrote (along with a bunch of great co-authors) the General Theory of Decentralized Applications first defining the term and creating a framework for their structure: https://github.com/DavidJohnstonCEO/Dec ... plications

In 2014, I founded the Decentralized Applications Fund to specifically focus on supporting open source, decentralized, blockchain based infrastructure projects such as MaidSafe, Ethereum, and Factom. http://www.dappsfund.com/ The Dapps Fund is pretty novel in that it was the first venture fund to raise all its capital in digital assets, invest its capital as digital assets, and only purchase digital assets such as MSAFE, or Factoids, instead of investing in traditional equity or convertible notes in startups.

In 2015, I now spend most of my time as a Board member of the projects the Dapps Fund has supported and working to see these projects launch and scale up to their full potential. http://factom.org/team

You might have heard of Johnston's Law which states: "Everything that can be decentralized, will be decentralized" That's a good way of summing up what I'm passionate about and eager to see become a reality in the coming years. http://www.johnstonslaw.org/

I look forward to your questions today : )

David A. Johnston

[BitcoinXio]

Hi David, thanks for doing this AMA!

Since you are really into decentralized applications, what are your general overall feelings on decentralized autonomous organizations? I think there are a few organizations right now focused on this, one that rings a bell is BitShares and the work they are doing. Can you speak to it and what you think about it?

Thanks!

[TeslaGen3]

David -

Thanks for taking the time to share with us your thoughts on B(b)itcoin and other things

Q1. Who are some of the people you admire and respect the most in the Bitcoin Industry?

Q2. Because Bitcoin is so young, could you tell me what you envision the industry looking like at the end of 2016? Do you think we will begin to see mass adoption begin?

Q3. I love Teslas (if you couldn't tell from my screen name) would you own one?

Thanks again!

[arnoudk]

Hello David,

Thanks for being part of this huge AMA event!

I'd be interested to know what you see as the biggest challenge that bitcoin faces today (that is not solved yet), and if you expect decentralized apps to be able to help bitcoin overcome this challenge.

Thanks!

[DJohnston]

Thanks for the question BitcoinXio,

Yes I feel very strongly that Decentralized Autonomous Organizations will play an out sized role in the future. The idea of letting anyone compete to add value to a decentralized application, as bitcoin has proven is possible with its proof of work, is a powerful concept that many projects are rushing to emulate and expand upon.

The most important thing I've learned the last few years in this quest to build decentralized systems is that one first has to have the right foundations in place in order to be successful. To barrow an example from the development of internet based services, many people realized that video would one day be common place on the web and rushed to start internet based video services. However many early web based video companies failed in the late 1990's and early 2000's simply because affordable broadband speed internet connections were not yet available to enough of the public. It wasn't until 2005 when YouTube happened to come along at just the right moment when broadband internet was going mainstream that the dominate video platform on the internet emerged.

In the same way its important to see how early in its development blockchain technology is. Everyone wants to rush forward and build lots of exciting and advanced end user applications, however those that want to be successful in this will realize which pieces of fundamental infrastructure need to exist in order for them to scale. I've often talked in my presentations about the big three infrastructure platforms the ecosystem needs. Those are decentralized compute (Ethereum), decentralized data storage (SAFE Network) and finally decentralized bandwidth. In addition projects such as Factom that allow for a scale able audit and verification layer on blockchains are critical for anyone seeking to build applications requiring decentralized identity, reputation, systems of records that require securing millions or billions of entries per day for large enterprise systems.

2015 has been a good year in this regard.
Ethereum Frontier is launched: https://www.ethereum.org/
Factom Genesis is launched: http://factom.org/
The SAFE Network is nearing launch with test nets up and installers coming soon: http://maidsafe.net/

So the projects I see doing well such as Augur: http://www.augur.net/ are positioning themselves to build on top of these critical pieces of infrastructure (Ethereum in Augur's case) vs, trying to re invent the wheel themselves or move forward without these foundations.

Thanks again for the great question.

[DJohnston]

David -

Thanks for taking the time to share with us your thoughts on B(b)itcoin and other things

Q1. Who are some of the people you admire and respect the most in the Bitcoin Industry?

Q2. Because Bitcoin is so young, could you tell me what you envision the industry looking like at the end of 2016? Do you think we will begin to see mass adoption begin?

Q3. I love Teslas (if you couldn't tell from my screen name) would you own one?

Thanks again!

TeslaGen3 Guy : )

Thanks for the questions.

1. There are a lot of great folks I admire in the Bitcoin / Blockchain space too many to list here. Among those that come to mind are:

Vitalik Buterin founder of Ethereum: https://en.wikipedia.org/wiki/Vitalik_Buterin for his willingness to redesign a blockchain from scratch.
Paul Snow founder of Factom, who's quote that "Honesty is Subversive" I think perfectly captures the Ethos of this community.
David Irvine for his vision when it comes to decentralizing with world's internet infrastructure.
Roger Ver for his moral and ethical center when it comes to privacy, freedom and human rights: https://rogerver.com/
Barry Silbert for navigating the world of banks and finance to get Bitcoin into those system via GBTC, DGC, and other vehicles.
Gavin Andresen https://twitter.com/gavinandresen for this consistent efforts to build important upgrades to the blockchain.
Erik Voorhees for consistently building blockchain technology that respects users privacy from the core of its functionality on up.

2. I wrote a blog post a little while back on how I think this industry will get to mass adoption. In short by removing users expose to price volatility the same way we did for merchants. https://medium.com/@DJohnstonEC/the-bat ... 30a2e933be

3. I would totally own a Tesla. I've got my eye on the Tesla X for my family. Especially now that auto pilot provides a level of safety it would be impossible for me to find in any other car.

Thanks again for the questions.

[DJohnston]

Hello David,

Thanks for being part of this huge AMA event!

I'd be interested to know what you see as the biggest challenge that bitcoin faces today (that is not solved yet), and if you expect decentralized apps to be able to help bitcoin overcome this challenge.

Thanks!

Thanks for the question Arnoudk,

The biggest challenge bitcoin faces to broad user adoption lies in a mis match of assets and liabilities. If a person has all their costs / liabilities in life denominated in USD or another local fiat currency, then it is difficult to hold the value you will later pay those costs in denominated in a different asset. For example if I have a rent payment due in USD each month, I can't hold the money that I intend to pay that rent denominated in another asset which might decline against USD and leave me short.

So I see denominating both liabilities and assets in BTC is the key in the long term to allowing users to hold move than their savings, but also their working capital in bitcoin or other digital commodities. This isn't an easy problem to solve. Many projects such as Circle.com, Tether.to, Uphold https://uphold.com/, String https://angel.co/stringco Coinapult https://coinapult.com/ are all trying to solve this problem with different approaches to hedging, or synthetic finance, but still offering the positives of having their user's assets on the blockchain.

This tech is coming, but it will need to be integrated into the whole ecosystem for the network effect of this advantage to build.

[arnoudk]

Thanks for your previous response. I agree that most people would want and need to be insulated from the exchange rate fluctuations between bitcoin and their native fiat currency. I am convinced that, for the foreseeable future, no goods or services will be priced in bitcoin as their main currency as the currency cannot possibly be stable yet. It is too early days. It's like wishing the stock price of a small startup company remains exactly the same. If bitcoin gains broad traction, then the price must inevitably increase dramatically. If it does not, it must go down to 0. (I disagree with people who say that the best thing for bitcoin is "no or limited volatility in the price", as that seems impossible to me in this part of the bitcoin life cycle).

Solutions for someone willing to pay their rent in bitcoin cannot, in my opinion, come from near-term stability in the price of bitcoin. In the future, should "everyone" be using bitcoin, things will change and prices will be denominated in bitcoin - including rent. Until that time, I agree that the only way to do this is to provide some type of hedging or insurance services on bitcoin that enables users to hold bitcoin, and protect themselves from the volatility.

It is an interesting chicken and egg problem, and I am glad that there are many smart people working on this!

If I have time for one more question: you wrote

You might have heard of Johnston's Law which states: "Everything that can be decentralized, will be decentralized" That's a good way of summing up what I'm passionate about and eager to see become a reality in the coming years. http://www.johnstonslaw.org/

Do you think decentralization is a cyclic phenomena, and that the world is now moving into decentralized, just to move into centralized at some point in the future? (analogous to mainframe (centralized) - personal computer (decentralized) - current cloud (centralized) - real cloud (decentralized))?

What is your boldest prediction about something that you will believe will be decentralized someday, where (almost) everyone thinks you have 'lost your mind'?

[2DaHilt]

What role do you see Omni http://www.omni.foundation playing in the 2.0 smart contracts scene?

[DJohnston]

Thanks for your previous response. I agree that most people would want and need to be insulated from the exchange rate fluctuations between bitcoin and their native fiat currency. I am convinced that, for the foreseeable future, no goods or services will be priced in bitcoin as their main currency as the currency cannot possibly be stable yet. It is too early days. It's like wishing the stock price of a small startup company remains exactly the same. If bitcoin gains broad traction, then the price must inevitably increase dramatically. If it does not, it must go down to 0. (I disagree with people who say that the best thing for bitcoin is "no or limited volatility in the price", as that seems impossible to me in this part of the bitcoin life cycle).

Solutions for someone willing to pay their rent in bitcoin cannot, in my opinion, come from near-term stability in the price of bitcoin. In the future, should "everyone" be using bitcoin, things will change and prices will be denominated in bitcoin - including rent. Until that time, I agree that the only way to do this is to provide some type of hedging or insurance services on bitcoin that enables users to hold bitcoin, and protect themselves from the volatility.

It is an interesting chicken and egg problem, and I am glad that there are many smart people working on this!

If I have time for one more question: you wrote

You might have heard of Johnston's Law which states: "Everything that can be decentralized, will be decentralized" That's a good way of summing up what I'm passionate about and eager to see become a reality in the coming years. http://www.johnstonslaw.org/

Do you think decentralization is a cyclic phenomena, and that the world is now moving into decentralized, just to move into centralized at some point in the future? (analogous to mainframe (centralized) - personal computer (decentralized) - current cloud (centralized) - real cloud (decentralized))?

What is your boldest prediction about something that you will believe will be decentralized someday, where (almost) everyone thinks you have 'lost your mind'?

Thanks for the additional thoughts and questions. On the points you made above regarding bitcoin denomination, I agree. Though I would point out that I think the transition between where we are today and a world in which bitcoin is a common choice for denominating transactions, contracts, assets and liabilities will be a sector by sector process. For example today there are already a few niche places I see bitcoin being used as the common denominator.

First there are the digital asset exchanges such as Poloniex https://www.poloniex.com/exchange#btc_xmr or Industry indexes such as Coinmarketcap http://coinmarketcap.com/#BTC that do denominate assets in BTC. The reasoning in these cases is Bitcoin is by far and away the common trading pair that trades against all other digital assets. Also bitcoin has the largest liquidity compared to those other digital assets, and many bridges that serve for it to trade into and out of fiat which the other digital assets do not. Lastly USD for the most part is not immutable or irreversible by nature. So bitcoin stands as the logical choice in the case of needing to trade an irreversible digital asset on the blockchain. Now if we extend this use case to a world in which more and more assets are recorded on the blockchain and prefer to be immutable then logically more and more assets will be denominated in bitcoin.

While denominating the rent on a house payment use case is still pretty far out from today, I could see paying for smart contracts or many other digital services that need to be irreversible being denominated in bitcoin today and more and more into the future.

On your question about if centralized via decentralized is by cyclical nature. I believe the answer is technology driven, but the end state is decentralized due to its sustainable nature of distributed systems vs the inherent fragility of centralized systems. For example people didn't prefer centralized libraries for human knowledge, its simply before the printing press it was too costly to do otherwise. Now written content and human knowledge is so vastly distributed as to be nearly impossible to lose or erase. "The internet is written in ink" as they say.

If this is indeed the case than the challenge is to provide technology that changes past assumptions. In the past trust was a difficult problem for which gate keepers, hierarchy, and access by permission was largely required in the financial world. Today trustless blockchain transactions between third parties are possible and that fundamentally changes assumptions about how to build the world's financial systems.

Lastly on your question about boldest claims I'll echo Erik Voorhees comments during our Fire Side Chat at the Texas Bitcoin Conference spring 2015. https://www.youtube.com/watch?v=mXlb84s3MpA Namely that we will come to see the Separation of Money and State as inevitable as and favorably as we do the Separation of of Church and State today.

[DJohnston]

What role do you see Omni http://www.omni.foundation playing in the 2.0 smart contracts scene?

Good question. It depends on the focus the core developers decide to have going forward when it comes to next features. Up until now the focus has been on the ability to issue immutable digital assets, the ability to trade those assets on the blockchain without introducing a third party and other related features.

Its a tough balance to strike between adding features and perfecting existing features. Often its not the platform that does everything, but the platform that does something very very well that builds a following and strong community in that specialty.

More broadly speaking I expect to see 2016 bring a great deal more interoperability than we have today in the blockchain space. I see projects such as Factom and Sidechains and others bringing us closer to being able to transfer both data and value from one blockchain to another in a trustless fashion.

[LISAM]

Which digital currency (litecoin,dogecoin, peercoin etc) do you think will be the biggest competitor to bitcoin in 5 years

[rogerver]

Hi David,

Thank you for all your wonderful contributions to this space!

1. What authors or books had the biggest impact on your world view?

2. Can you ever imagine yourself working on anything other than the crypto-currency / smart contract space, and if so, what would that be?

[DJohnston]

Which digital currency (litecoin,dogecoin, peercoin etc) do you think will be the biggest competitor to bitcoin in 5 years

I know Charlie Lee from the conferences and meetings over the past few years so I'll say litecoin : )

Dogecoin is interesting because it offered the first good tipping application for digital currency and did a good job of handling micro payments. Though I believe Change Tip has largely ported this advantage to the bitcoin blockchain ecosystem. https://www.changetip.com/ I expect this to be a larger trend. That is experimentation in other blockchains, side chains, higher layers and when possible that advance will be ported in one way or another back to the bitcoin blockchain or at least anchored into its strong security model.

Peercoin is interesting because it was one of the first digital tokens to popularize the proof of stake consensus model. https://www.peercoin.net/ Many others are now building on this earlier work to develop more robust proof of stake systems, this will certainly be an area of long term interest.

Though again its clear to me that bitcoin has won the network effect when it comes the payments / currency use case, the fact that these other tokens developed strong community followings is due to their differences on confirmation times, tipping, or consensus that makes them interesting, not necessarily that they do or will ever "compete" with bitcoin as a payment / currency network.

Though I suppose its possible if bitcoin developers made enough poor decisions in its technology development over time, as to severely limit its use as a peer to peer cash system, then naturally another system that had not placed such limitations on its own development would over time be preferred by users. In other words its bitcoin's use case to lose when it comes to payments, digital cash, and trustless global value transfer.

[DJohnston]

Hi David,

Thank you for all your wonderful contributions to this space!

1. What authors or books had the biggest impact on your world view?

2. Can you ever imagine yourself working on anything other than the crypto-currency / smart contract space, and if so, what would that be?

Roger,

Thanks for the kind words and the great quality questions.

1. When I was young, reading 1984, Brave New World, and Fahrenheit 451 had a strong impact on my world view around the dangers of centralized institutions, censorship, and the effects of group think.

As I grew older I began delving into the writings and talks by those including, Murray Rothbard regarding Libertarian thought, Ron Paul regarding the corruption inherent in the fractional reserve fiat based monetary system, and Stefan Molyneux regarding the cancerous effects of creating monopolies on force and courts.

Above all else for me David Friedman's classic 1989 book "The Machinery of Freedom" http://www.amazon.com/The-Machinery-Fre ... 0812690699 stands out as the seminal book that convinced me there were no areas of human endeavor that could not be improved and historically had been improved by competition, including courts, jurisdictions, laws, policing, defense and any other type of service or product. There for the ultimate conclusion to the question of politics was to allow for over lapping intra-jurisdictional competition for all services and products including education, health care, roads, arbitration, protection, emergency response, and defense.

2. I foresee myself spending a lot of years in the blockchain, smart contract, and immutable record space. This area combines so many of my interests in human ethics, emerging technology, financial reform, and I believe this industry will grow as the technology is ever more widely adopted to encompass virtually every field, from internet identity / security to the world's vast systems of public and private records. Anywhere an application can benefit from mathematically enforced honesty, real time auditing, and global interoperability, the blockchain will be of great use in improving that system. That's a massive opportunity which will take the better part of the next decade or two to play out around the world.

With that said, through out my career I have pursued the technology trends where I thought I could make the greatest difference and contribution. From 1997 to 2006 that was the early internet, from 2006 to 2012 that was renewable energy and biotechnology, from 2012 to 2015 that has been bitcoin and blockchain technology. So if in 5 or 10 years I feel I've made every contribution I can to the blockchain space and it has become entirely common place, universal and ubiquitous as the internet has today, than I'm sure I'll seek to make a difference in other long term meaningful fields of technology.

For example I've long carried an interest in artificial intelligence, but my attempts to enter the field have been too early or it has become clear much larger players such as Google, Apple, Microsoft, Facebook, and Amazon are making substantial advances, and thus it isn't clear where I can add substantial novel value. Or for example I have had a life long passion for space commercialization and colonization, however when I've crunched the numbers it was clear the massive capital costs involved really limit the possibilities of innovation in that field, making it too early for me to make a real contribution. Though Elon Musk's work with Space X has done amazingly well at reducing the cost to low earth orbit by almost an order of magnitude from 15 years ago ($1,500 USD per pound, from $10,000 USD per pound). If he is able to further reduce the cost to orbit another order of magnitude, say $100 per pound to low earth orbit, than a new window will open for real innovation in that field. I also follow genetics and robotics, but I have not seen an obvious path to making contributions in those fields.

[TonySwish]

David,

First of all, thank you so much for the very kind words about Augur, they are well appreciated and our team is absolutely ecstatic by the reception we have had.

For those who aren't aware, I am involved in Marketing and have been with Augur throughout 2015 in managing the crowdsale campaign and other marketing duties, in addition to working with BitPay as a digital marketing manager in 2014 and being responsible for some cool firsts and landmark campaigns. In this space, I see the marketing efforts by many projects to be severely lacking and I'm attempting to do everything I can to share the wisdom I have gained in the past few years.

Now that the long intro is out of the way, what other areas do you feel Blockchain-based startups are lacking in? Additionally, what resources would you recommended to help remedy these areas of weakness?

Thanks again!